US state insurance regulators are tightening how they assess private credit, complex investments and offshore reinsurance, changes that could provide a clearer view of the risks sitting behind life insurers’ capital and policyholder guarantees.
The National Association of Insurance Commissioners (NAIC) outlined the measures in a response to Senator Elizabeth Warren, after the Massachusetts Democrat sought information about insurers’ exposure to private credit, private equity and affiliated investments.
The changes come as private assets occupy a significant share of insurer portfolios. The NAIC estimates US insurers held about $1.2 trillion in private credit at the end of 2025, equivalent to roughly 13% of cash and invested assets and 21% of bond holdings.
“Rather than relying on a static regulatory framework, regulators have regularly updated capital requirements, reporting standards, supervisory tools, and analytical capabilities to address emerging risks while maintaining a consistent focus on insurer solvency and policyholder protection,” NAIC leaders said.
Much of that work is focused on investments whose credit quality, valuation or liquidity can be harder to assess. The NAIC identified $544 billion in privately rated bonds, business development companies and private credit funds as areas warranting particular attention because of their complexity or lower transparency.
The shift is particularly visible in life insurers’ bond portfolios. Privately placed securities accounted for 48.4% of life industry bonds at the end of 2025, up from 37.4% five years earlier, according to S&P Global Market Intelligence data. The growth of private placements has already prompted changes in how insurer investments are classified.
One of the most significant changes is the NAIC’s principles-based bond definition, which took effect in January 2025. Rather than relying primarily on an investment’s legal form, regulators now consider its underlying economic characteristics when deciding whether it qualifies for bond treatment.
Private ratings are also receiving closer scrutiny. Regulators now receive supporting information on how a private letter rating was reached, while the NAIC is developing a framework to assess whether rating providers’ methodologies and mappings remain appropriate for regulatory purposes.
That has become more important as private and illiquid investments grow. Moody’s estimated those holdings at $807 billion at the end of 2025, with the 10 largest holders accounting for 44% of the total.
Regulators are also strengthening asset-adequacy testing through Actuarial Guideline 53, with greater attention to structured assets, illiquidity and Level 3 valuations.
A similar approach is being applied to reinsurance. Actuarial Guideline 55 targets certain life and annuity transactions involving offshore affiliates, captives and other reinsurers, requiring regulators to assess whether assets and reserves remain sufficient after risk has been transferred.
The issue has drawn attention beyond state regulators. The US Treasury convened state insurance commissioners in May to discuss private credit, offshore life and annuity reinsurance, private letter ratings and evolving insurer business models.
Affiliated investments are part of that broader scrutiny. Life insurers reported $321 billion of affiliated investments at year-end 2025, equivalent to about 5% of their cash and invested assets. The NAIC said such investments are permitted but can raise distinct questions around valuation, concentration, complex structures and potential conflicts of interest.
“State insurance regulators continually evaluate whether the solvency framework appropriately captures emerging and changing risks,” NAIC leaders said.
As those rules tighten, differences between insurers may become easier to see beyond headline capital ratios, including the quality of the assets they hold, how those assets are valued and how much risk has been transferred through reinsurance.
